Sunday, June 27, 2010

Astarra weekend edition: Lockhart Road

David Morisset is the nom-de-plume of David Andrews – a former director of Astarra Capital – later Trio Capital – the responsible entity for the Astarra funds. The Morisset persona is a self-published poet and a worthwhile writer. He writes a blog which deserves more attention.

However as an independent director of a financial institution he has a problem – under his nose it seems about 170 million has simply gone missing. With respect to one fund (the Astarra Strategic Fund or ASF) the judge said:

there are strong reasons to believe that a substantial part of the funds of AFS were invested fraudulently and have been lost;

It is unlikely those were lost to David Andrews or David Morisset. Instead he was just a director when it happened.

When you hear me sing in the corridor you would (justifiably) suggest I do not give up my day job. But seeing how well Morisset writes and his problems as a financial director I suggest that he is much better at the weekend job. Award winning even.

And below is a riff he wrote about a fictional funds management organization. The resemblance to Astarra is surprisingly strong…

The Sydney Morning Herald notes that this “cracking yarn” is suddenly missing from Morisset’s blog – which is a pity. Like many things written by Morisset it deserves more attention.

To ensure that I have reprinted it below.

John

PS. For Michael Mascasero in the fiction substitute Matthew Littauer who was murdered in Roppongi in mafia style circumstances…

WEDNESDAY, MARCH 17, 2010

The following is an excerpt from the opening pages of David Morriset's crime fiction novel set against the background of Australia's trillion dollar superannuation industry.

Michael Macasero had apparently found out the hard way that the noise and traffic on Wanchai’s Lockhart Road in the early morning hours was ample cover for discretely committing murder in a rubbish-strewn alley. Two Chinese garbage men, who had shaken with fear at their discovery, had found the blood-soaked body. Overworked but politically sensitive police had come up with an inconclusive finding on the death. Macasero was, they had surmised, just another American who got into trouble in the red light district and could not find a way out of it with all his vital arteries intact. The police reports had skirted around the demonstrably obvious facts that the weapons used and the nature of the wounds suggested Triad connections.

None of the Hong Kong law enforcement agencies had seemed inclined to give the matter any more thought until years later when the Australian Federal Police raised some questions at the instigation of investment regulators puzzled by apparent irregularities in a Sydney-based superannuation fund. Even then the Hong Kong authorities had been artfully unhelpful and the Australians appeared to give up and go away to solve less complicated problems – or at least that is what they did at first.

Macasero had been proud of his reputation as an investment guru in the baffling field of hedge funds and he had claimed the equivalent of US$100 million under management. Still in his thirties when he was killed, he had set up supposedly sophisticated vehicles in various tax shelters to provide services for his clients in Hong Kong and was expanding into Australia. He knew very little about the great southern land but he had been attracted by its various governments spruiking the notion of Sydney as a major financial centre. His young English colleague, Joel Rogers, had an Australian mother and he had already set up a small Sydney office. Rogers was ready to move there permanently as soon as Macasero made the call.

Like many Filipino Americans Macasero was the product of a family that had escaped people power with a fortune assembled during the Marcos years and had then relocated everything but its money to the land of the free. An only child, he attended college at UCLA and then set off for New York to learn about hedge funds. Tiring of the compliance obligations of working for Wall Street firms, he was seduced by a job offer from a charismatic English investment banker who was looking for a hedge fund specialist to exploit new business opportunities in Hong Kong.

By this time Macasero was unencumbered by any unbreakable links to his adopted country. His parents had died and left him with ample financial resources, which his father had cannily spread around the Caymans, the British Virgin Islands, and several other similar havens of the rich and secretive. There was even a large balance in a Swiss bank account that gave Mr Macasero senior some evident respectability when he wanted to source political donations. Where the fortune came from was not clear to Michael but he was grateful for it and determined to preserve it as a first priority and add to it as a matter of urgency before he retired to enjoy the rest of his life. Inheriting his father’s entrepreneurial gifts and distaste for traditional ways of doing things, the hedge fund industry was a natural fit. It was mysterious, gently regulated and seemingly irresistible to high net worth customers and ill-governed institutions. Returns were driven not by the overall market trend but by the wits of the investment manager. Some would say it was all a matter of luck, but Michael Macasero described himself as skilful without any embarrassment.

Rodney Hawker was more than twenty years older than Michael Macasero when they met by chance at an investment seminar in the Pierre Hotel in a huge function room overlooking the yellow taxis of Fifth Avenue and the tree-lined borders of Central Park. When the conversation switched to hedge funds and the opportunities for new business they presented, Hawker mentioned his interest in prospecting the money men of Hong Kong as a first foray into the vast wealth management sector that was ready to be born in China. Macasero was all ears. They walked over to Trattoria del ’Arte on Seventh Avenue and, while they sampled the restaurant’s paper thin pizza and home-made pasta coated with subtle sauces, Hawker talked Macasero into coming with him to Hong Kong later that month. Macasero severed his Wall Street ties, sub-let his apartment and hopped on a plane without a second thought.

To the eyes and ears of a young American, Hawker epitomised suave English manners and style. His navy pin-striped suit was expertly tailored, but a little crumpled, his sky-blue and white check shirt did not quite match his Ferragamo tie of tiny red golf clubs on a grey background, but his voice was full of rounded vowels and seemed to come from the depths of his throat where it seemed a double bass had lodged. A more urbane observer might have noticed the traces of cockney in his accent – traces that became more pronounced as he drank his favourite scotch.

Hawker was a self-made man of the most determined sort because he had reinvented himself several times over. Now well into his fifties he could look back on stints as a junior civil servant in the sprawling administrative divisions of the Foreign and Commonwealth Office, a commercial banker for Barclays at a time the bank was struggling to come to grips with the fallout from deregulation, several roles as researcher and stock-picker with small funds management groups that ended when his employers were gobbled up by bigger players, and a time as a freelance investment consultant, which was proving to be hard going to such an extent that his financial reserves were starting to diminish at a rather alarming rate. Convinced that he was finished in England, he decided to try Hong Kong.

Within six weeks of his arrival, Hawker had set up a tiny office on the fringes of the Island’s financial district near where it merged into the night life of Wanchai and then he had acquired an apartment in a nondescript building just off Nathan Road in Kowloon. He had also hired Bo, a young Filipina, as combination concubine, housemaid and procurer of alternative sexual services when he felt the need for variety or multiple partners. A veteran of two disastrous marriages, Hawker made it clear from the outset that he offered Bo sexual experimentation, a steady income that allowed her to meet the needs of her extended family in Manila’s slums, a comfortable place to sleep, ample food to eat, and a much more secure life than she had as one of the city’s unfortunate bar girls. The fact that Bo was almost thirty and losing her ability to pull customers on a regular basis meant that she was easily persuaded and, indeed, she was actually grateful for the chance to be exploited on such a generous basis.

Setting about the task of networking amongst the expatriate community and finding his way around Hong Kong’s financial labyrinth was second nature to Hawker. He had a glib tongue and his resume was edited in such a way that it looked both impressive and authentic. However, running an office and the administrative chores that went with it were a bore. When it was time to buy information technology items like computers, software and printers, Hawker was quick to surrender to the obvious. He was a twentieth century man with enough in the way of people skills to sell himself and his services to people like him. But when it came to dealing with twenty-first century office infrastructure and its suppliers, he was lost in a jumble of words, symbols and business practices that were indecipherable. So he did what any sensible twentieth century man would do – he placed an advertisement for an assistant with a superior IT skill set and an interest in starting a career in the investment industry on the bottom rung of a very high ladder.

Most of the respondents knew almost as little about IT as Hawker but one of them was different. Joel Rogers had only been in Hong Kong for a few days and he just wanted a start. Hawker offered him the job and he commenced work immediately after the interview, during which Rogers had babbled on about hedge funds and the dearth of them in Hong Kong.

Rogers was more than capable. He had graduated from the University of the West of England in business studies. While students came from all over England to study at what used to be the Bristol Polytechnic, Rogers was almost a native. He was raised in Portishead on England’s dreary west coast in a house on Blaggard Street, so named, according to regional folklore, because of its former associations with smugglers and pirates. Unfortunately his west country accent and the origins of his qualifications did not play well in the City of London and all he could manage after six years of trying was a series of low-paid but extremely stressful dealing desk jobs. One day he found himself gazing out of a Canary Wharf skyscraper window and looking east. Like many others before him, sensing failure in London, he decided to give it a go in Hong Kong.

After three months, Rogers formed the view that Hawker was a bit of a pain-in-the-neck. He delegated only the most menial tasks and left his assistant almost office-bound. However, new business opportunities were abounding. Very soon, Rogers expected, he would be managing money in a hands-on way that would have still been light years away in London. Hawker, unfortunately, had other ideas. He flew to New York, ostensibly to attend a hedge funds conference, but, in reality, his main aim was to find a fund manager. He found one in Macasero.

When Macasero landed in Hong Kong and set himself up in Hawker’s office suite in a corner offering a view over Wanchai, Rogers was disappointed at first. However, that soon changed. Macasero knew what he was doing and started taking care of all the details that were beyond Hawker and unknown to Rogers. More importantly, he adopted the role of mentor to Rogers in a collegiate fashion that reflected the small age difference between the two of them. Rogers was learning business development from Hawker and money management from Macasero so he was happy.

Within three weeks of Macasero’s arrival, the firm had adopted the catchy name of Triadica Securities and was about to launch its flagship fund, labelled, rather pretentiously, as the Masterwork Macro Fund. The word "triadica" was the name of flower common in Southeast Asia, chosen by Macasero for sentimental reasons and because it seemed to refer to the firm’s founding by three theoretically equal partners. Lack of awareness that there were other organisations in Hong Kong who might find the company’s name interesting was evidence of Macasero’s naïveté and a testimony to the entire group’s ignorance.

2 comments:

Clearly the person who made the previous comment has no knowledge of Ayn Rand (to whom the quote is attributed) or her ideas about personal responsibility and the degenerative impact of collective thinking. The other quotes on Morisset's page - including the one from the New Testament - are evidently not worthy of comment. I wonder why?

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